Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai 400005. Tel. 022 22163964/65/69 Fax 22163976 Email: mercindia@merc.gov.in Website: www.mercindia.org.in/ www.merc.gov.in CASE No. 113 of 2016 In the matter of Petition of VVC Pharma & Speciality Chemicals Pvt. Ltd regarding non-compliance of the Appellate Authority, Mumbai s Order dated 29.05.2013 by Maharashtra state Electricity Distribution Co. Ltd. Coram Shri. Azeez M. Khan, Member Shri. Deepak Lad, Member M/s. VVC Pharma & Speciality Chemicals Pvt. Ltd. V/s. Maharashtra State Electricity Distribution Co. Ltd. Petitioner Respondent Appearance For the Petitioner: For the Respondent: Authorized Consumer Representative: Adv. Ms. Rubina Khan Adv. Ms. Radha Bhandari Shri. P. G. Pethkar, SE, MSEDCL Dr. Ashok Pendse, TBIA ORDER Dated: 11 April, 2017 M/s. VVC Pharma & Speciality Chemicals Pvt. Ltd. ( VVC Pharma ), Plot No. F 6/2, F 7, MIDC Industrial Area, Lote Parshuram, Taluka Khed, Distt. Ratnagiri, has filed a Petition on 18 August, 2016 seeking action against Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) under Section 142 read with 146 of the Electricity Act (EA), 2003 for violating the Order in Appeal No. 207 of 2013 dated 29 May, 2013 passed by the Appellate Authority, Mumbai under Section 127 of the EA, 2003. Order in Case No. 113 of 2016 Page 1 of 7
2. VVC Pharma s prayers are as follows: a) that the Hon ble Commission be pleased to direct the Respondent to give full effect to the order dated 29 th May 2013 of the Appellate Authority. b) that the Hon ble Commission be pleased to direct the Respondent to forthwith refund the amount of Rs. 9,15,955/- (Rupees Nine Lakhs Fifteen Thousand Nine Hundred and Fifty Five Only). c) that the Hon ble Commission be pleased to direct strict actions stipulated u/s. 142 r/w 146 of the Act against the Respondent and its concerned officers. 3. The Petition states as follows: 3.1 VVC Pharma is in the business of manufacturing pharmaceuticals and chemicals at its factory located in the Lote Parshuram MIDC Industrial Area. 3.2 In December 2010, it had applied for HT electricity connections. Vide letter dated 28 th January 2011, MSEDCL had sanctioned power supply to it. On 4 th February 2011, VVC Pharma paid a deposit of Rs. 27,41,500 along with other charges, for which it received receipts. 3.3 On 6 th March 2013, MSEDCL issued a provisional bill of Rs. 18,31,910 under Section 126 of the EA, 2003 for alleged unauthorized use of electricity. MSEDCL had alleged that VVC Pharma had used the electricity supply for construction instead of for industrial purpose. VVC Pharma had denied it. The provisional bill was issued without any inspection or inquiry on the premises of VVC Pharma by the designated officers to support the alleged unauthorized electricity use. 3.4 Being aggrieved by the allegations and the provisional bill issued by MSEDCL, VVC Pharma filed an objection to the provisional bill by letter dated 11 March, 2013, and requested a hearing. MSEDCL did not reply. 3.5 Thereafter, MSEDCL, by letter dated 4 th April, 2013, confirmed the provisional bill and passed a final Assessment Order wherein VVC Pharma was directed to pay Rs. 18,31,910. 3.6 Aggrieved by the final Assessment Order, by letter dated 29 th April 2013, VVC Pharma put on record its objections that the final Assessment Order was passed in the absence of any hearing and asked MSEDCL to withdraw the final Assessment Order. MSEDCL did not reply to that letter. 3.7 On 2 May, 2013, VVC Pharma filed an Appeal No. 207 of 2013 under Section 127 of the EA, 2003 before the Appellate Authority. VVC Pharma also deposited Order in Case No. 113 of 2016 Page 2 of 7
50% of the amount mentioned in the final Assessment Order with MSEDCL in as a requirement to file the Appeal. 3.8 MSEDCL filed its reply and was heard by the Appellate Authority. By an Order dated 29 May, 2013, the Appellate Authority allowed the Appeal and set aside the final Assessment Order. The Appellate Authority also ordered that MSEDCL refund the 50% amount deposited with it and to comply with the Order within 30 days. 3.9 However, MSEDCL failed to comply with the Order dated 29 May, 2013 and did not refund the 50% amount. 3.10 By letters dated 28 October, 2014, 13 June, 2013, 13 November, 2013, and 23 May, 2016, called upon MSEDCL to comply with the Order and asked it to refund the 50% amount, but MSEDCL failed to do so. MSEDCL has not refunded the amount till date, in violation of the Oder. 3.11 MSEDCL has deliberately failed to comply with the directions of the Appellate Authority and has thus committed contempt of its Order and directions. This deliberate failure has made MSEDCL liable for action under Sections 142 and 146 of the EA, 2003. 3.12 MSEDCL had filed a Writ Petition No. 3490 of 2014 before the Bombay High Court challenging the Order dated 29 May, 2013, but there has been no stay of the Order till date and it is operative. 4. In its Reply dated 28 December, 2016, MSEDCL has stated as follows: 4.1 The Assistant Engineer, MSEDCL inspected the premises of the consumer VVC Pharma on 7 February, 2013 and observed that it is utilizing the power supply for construction purpose whereas the supply is authorized for industrial purpose. 4.2 MSEDCL issued a provisional assessment and a notice was given to VVC Pharma. Personal hearing was conducted on 14 March, 2013 which was attended by S/Shri R. M. Bhalerao, Manager, Anil Naidu, Employee/Officer, Ravi Anand, Consultant, and Smt. Asha Gaikwad, Consultant for VVC Pharma. On the part of MSEDCL the hearing was attended by S/Shri. S. K. Patil, Superintending Engineer, Ratnagiri, C. V. Pandit, Executive Engineer and M. V. Suryatal, Assistant Engineer, Circle Office, Ratnagiri. 4.3 At the hearing, the Officers of VVC Pharma categorically admitted that it had consumed the electricity for construction purpose. 4.4 On the basis of the spot inspection report prepared by the Assistant Engineer, the Superintending Engineer, Ratnagiri Circle, issued a provisional Order as per the Order in Case No. 113 of 2016 Page 3 of 7
provisions of Section 126 of the EA, 2003 for payment of Rs.18,31,910 as the electricity was used for a purpose other than for which it was supplied. 4.5 VVC Pharma raised an objection to the bill; hence, after giving a reasonable opportunity of hearing, the Assessing Officer passed the final Order on 4 April, 2013 and thereby confirmed the provisional bill dated 06 March, 2013. 4.6 VVC Pharma filed an Appeal before the Appellate Authority on 2 May, 2013 seeking that the entire bill issued under Section 126 of the EA, 2003 should be withdrawn. The Appeal was finally decided by the Appellate Authority on 29 May, 2013, setting aside the final Assessment Order and ordered MSEDCL to refund the amount of Rs. 9,15,955 deposited by VVC Pharma. 4.7 In its Order, the Appellate Authority held that the Assessing Officer had not personally carried out the inspection of the premises, machine, gadgets, devices etc. which is mandatory, and for this reason held that the provisional assessment order is not in consonance with law. Moreover, two independent witnesses were not taken for the visit. Panchanama was not carried out, spot inspection report was not signed by two independent witnesses, the load at the time of inspection was not recorded, and the actual connected load in usage on the date of spot inspection was not ascertained by physical verification. 4.8 Being aggrieved by that Order, MSEDCL has filed Writ Petition No.3490 of 2014 under Articles 226 & 227 of the Constitution of India before the Bombay High Court. 4.9 MSEDCL has permanently disconnected the power supply of VVC Pharma on 1 August, 2014 on its own request. At the time of disconnection, MSEDCL had an amount of Rs. 27,41,500 with it as Security Deposit, and Rs. 9,15,955/- deposited by VVC Pharma as per the provisions of Section 127 of the EA, 2003. 4.10 The Superintending Engineer, Ratnagiri Circle referred the issue to the MSEDCL Legal Adviser, Pune Zone for guidance. Vide letter dated 1 January,. 2015, the Legal Adviser opined that the amount of Rs. 9,15,955 be refunded to VVC Pharma in compliance with the directions of the Appellate Authority, and that the entire amount of final Assessment under Section 126, i.e. Rs. 18,31,910, deducted from the Security Deposit shall follow the suit as per the final orders of the High Court. 4.11 The amount of Rs.18,31,910/- is deducted by MSEDCL from the Security Deposit of VVC Pharma and the remaining amount of Security Deposit and the amount of Rs. 9,15,955 refunded, subject to the final Order of the High Court in Writ Petition No. 3490 of 2014. Order in Case No. 113 of 2016 Page 4 of 7
4.12 The Superintending Engineer, Ratnagiri Circle refunded the remaining Security Deposit amount and the amount of Rs. 9,15, 955/- deposited by the Petitioner as per the provisions of Section 127 to VVC Pharma. Now VVC Pharma has filed the Petition before the Commission for refund of the Security Deposit amount and non-compliance of the Order of the Appellate Authority. 4.13 In view of the Writ Petition No.3490 of 2014 filed by MSEDCL against the Order of Appellate Authority being admitted, the action in respect of the bill for Rs. 18,31,910 being dependent on the decision of the Bombay High Court, it is required to be finalized as the per final Order in that matter. 4.14 The sum of Rs. 18,31,910/- is deducted from the Security Deposit of VVC Pharma and MSEDCL has refunded the remaining amount of Security Deposit amount along with Rs. 9,15,955 subject to the final Order of the Bombay High Court in Writ petition No. 3490 of 2014. 5. In its Rejoinder dated 2 January, 2017, VVC Pharma has stated that: 5.1 VVC Pharma has made a limited prayer for refund of the amount of Rs. 9,15, 955 (i.e. 50% of the alleged assessment amount) which was deposited pursuant to Section 127 of the EA, 2003. It has nowhere in the Petition raised the issue of refund of the Security Deposit amount, and MSEDCL is trying to mislead by interlinking both the issues. 5.2 MSEDCL is in contempt of the Order of the Appellate Authority which had, while allowing the appeal and setting aside the final assessment Order, inter- alia directed that: i) MSEDCL shall refund the amount deposited with it; and ii) MSEDCL shall comply with the Order within 30 days. 5.3 Although Writ Petition No. 3490 of 2014 has been filed by MSEDCL challenging the Order dated 29 May, 2013, no stay order or direction is passed in the matter; and hence MSEDCL cannot cite the pendency of the Writ Petition for non-compliance of the Order of the Appellate Authority. 5.4 In para 8 of its Reply, MSEDCL has itself admitted that it had referred the issue to its Legal Adviser, Pune Zone for guidance and that, vide letter dated 1 January, 2015, the Legal Advisor had advised refund of the said amount of Rs. 9, 15,955. However, MSEDCL has chosen to ignore this opinion as well, and deliberately failed to refund the amount to the Petitioner in contempt of the Order dated 29 May, 2013. 6. At the hearing held on 5 January, 2017, VVC Pharma reiterated the submissions in its Petition. It submitted that, on the Appeal filed against the assessment under Section 126 Order in Case No. 113 of 2016 Page 5 of 7
of the EA, 2003, the Appellate Authority, by Order dated 29 May, 2013, allowed the appeal and set aside the Final Assessment Order passed by the Assessing Officer. It further directed MSEDCL to refund the amount of Rs. 9,15,955 (50 percent of the total assessment amount) which was deposited by VVC Pharma with MSEDCL within 30 days. Despite reminding it on several occasions, MSEDCL failed to comply with the Order of the Appellate Authority. MSEDCL in the meantime filed a Writ Petition No. 3490 of 2014 in the High Court, which is pending. There is no stay on the Order of the Appellate Authority. MSEDCL stated that it has partly complied with the Order of the Appellate Authority and refunded Rs. 9,15,955 through RTGS on 18 February, 2016. MSEDCL has also refunded Rs. 7,61,970 after deducting the assessment amount from the Petitioner s Security Deposit, and submitted a copy of the RTGS transaction of Bank of Maharashtra dated 18 February, 2016 showing the amount of Rs. 16,77,925. The Commission expressed its displeasure as to the non-compliance of the Order in totality and within the stipulated time limit. VVC Pharma stated that it would submit the factual position within three days about the claim of MSEDCL regarding the refunds made to it through RTGS. 7. In its submission dated 9 January,2017, VVC Pharma stated that: 7.1 An aggregate amount of Rs. 16,77,925 has been received by VVC Pharma from MSEDCL on 18 February, 2016 against the Security Deposit of Rs. 27,41,500. 7.2 VVC Pharma is yet to receive the following amounts aggregating to Rs.19,79,530 from MSEDCL in compliance of the Order dated 29 May, 2013: a. Rs.9,15,955/- deposited in terms of Section 127 of the EA, 2003; and b. Rs. 10,63,575/- against the balance Security Deposit of VVC Pharma. Commission s Analysis and Ruling 8. On the Appeal filed by VVC Pharma, the Appellate Authority, on 29 May, 2013, has set aside MSEDCL s final Assessment Order for payment of Rs. 18,31,910, and directed MSEDCL to refund the amount of Rs. 9,15,955 (50% of the assessment amount) deposited by VVC Pharma within 30 days. 9. MSEDCL has stated that it has complied with the Order of the Appellate Authority to the extent of refunding Rs. 9,15,955 by RTGS on 18 February, 2016. 10. MSEDCL has also permanently disconnected supply to VVC Pharma at its request. Consequently, MSEDCL was also required to return the Consumer Security Deposit against that connection amounting to Rs. 27,41,500 (after deducting any dues). However, MSEDCL has refunded only Rs. 7,61,970 on 18 February, 2016, after deducting the amount of assessment of Rs. 18,31,910 (and other dues). Thus, MSEDCL continues to retain 50% of the assessment amount inspite of the Order of the Appellate Authority. Order in Case No. 113 of 2016 Page 6 of 7
11. MSEDCL has challenged the Order of the Appellate Authority through Writ Petition No. 3490 of 2014, which is pending before the Bombay High Court. Admittedly, the High Court has not stayed that Order. As such, it was incumbent upon MSEDCL to comply with the Order of the Appellate Authority pending the final outcome of the Writ Petition. 12. In these circumstances, MSEDCL is directed to refund the remaining amount of assessment which has been retained in violation of the Appellate Authority s Order within a month, along with applicable interest for the period from 30 days after the Order to the date of such refund. Ordinarily, the Commission would have asked MSEDCL to recover the interest from the officer(s) responsible for non-compliance were it not for the fact that such advice, which the Commission finds to be untenable, was given by its Legal Advisor, Pune. The Petition of M/s. VVS Pharma & Speciality Chemicals Pvt. Ltd. in Case No. 113 of 2016 stands disposed of accordingly. Sd/- (Deepak Lad) Member Sd/- (Azeez M. Khan) Member Order in Case No. 113 of 2016 Page 7 of 7